create: try to create the schema (DDL) when the session factory is started. When running with JPA, it happens when the EJB module is being deployed.
create-drop: like 'create', but also try to destroy the schema when the factory is destroyed (with JPA - when the EJB module is undeployed)
validate: just ensure the schema is as expected based on the mapping files
update: try to make incremental changes to the existing schema if it does not match the expected schema.
http://www.hibernate.org/hib_docs/v3/reference/en/html_single/#toolsetguide